Down Payment Residential & Commercial

5 Things you should know about Down payment

while applying for In India, generally, the banks and private financial organizations require loan applicants to pay a certain amount upfront as ‘down payment’ before sanctioning their loan application. In simple terms, down payment is the difference of amount that you pay out of your pocket and the amount of loan sanctioned by the lender. If you are applying for home loan, some of the important factors that you should keep in mind are discussed below:
1. Generally, the loan applicants need to pay a down payment ranging from 10% to 20% or 30% or 40% of the total value of the residential & commericial property.[ For instance, if you are looking to buy a property worth Rs. 20 Lakhs, the down payment would be around Rs. 3 Lakhs.
2. There is no pre-determined upper limit on the maximum amount of money you can pay as down payment. It greatly depends on your savings or ability to manage funds for making the payment. The more you are able to pay, the lesser would be the loan amount you would have to avail from the lender. It is best advised to pay upto 30% to 40 %percent of the property value as down payment.
3. Typically, the financial institutions consider the age of the property as one of the major criteria for approving home loan applications. The older the property, the harder it would be for you to get the loan sanctioned. Also, this would require you to pay higher amount of down payment. It is therefore advisable to look for new property to increase your chances of getting a home loan at affordable rate.
4. Another important thing about down payment is that, the payment doesn’t not include the miscellaneous costs such as transfer free, property tax, registration charge and stamp duty. The lenders usually include these charges in the home loan amount.
5. Start saving some amount every month as soon as you plan to buy home to ensure you have a significant sum to pay for down payment and reduce your loan amount. This in turn would help you in easy repayment of the loan.

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